More record prices ahead for cattle, analysis predicts

Fed and feeder steer prices are set to break records in 2014 and should remain high for a few years until U.S. producers have a chance to rebuild the national herd. Fed steer prices are projected in the mid $180s per hundredweight in 2014 and 2015, and cow-calf net returns are projected at $232 per cow in 2014 and $251 per cow in 2015.

After reaching record highs in 2013, fed and feeder steer prices are expected to increase sharply again in 2014, with high prices carrying into 2015.

Fed steers are projected to average $137.20 per hundredweight in 2014 and $137.74 in 2015. Cow-calf net returns per cow are projected at $232.28 in 2014 and $251.16 in 2015, according to economists with the Food and Agricultural Policy Institute at the University of Missouri.

In its annual U.S. Baseline Briefing Book released last week, FAPRI attributes increasing profitability in the cattle sector to declining feed costs, a tightening U.S. beef herd and fewer cattle imports.

Larger global harvests in 2013 will keep prices for most feed crops below recent peaks. The average corn price for the 2014 crop is projected at $4.17 a bushel, down from $4.42 in the last marketing year and the $5.18 average for the five years previous. FAPRI projects that price will be about $4 a bushel over the next 10 years.

Soybean prices are projected at $9.84 a bushel for the 2014 crop, down from $12.57 the last marketing year and the $11.55 average over the previous five years. FAPRI expects that price to be about $10 a bushel over the next 10 years.

Though crops have led in producing agricultural income recently, livestock and dairy enterprises will lead over the next two to three years, said Scott Brown, an ag economist at the University of Missouri.

Cattle prices in the next couple of years will be the best the industry has ever seen, and it looks like there’ll be high prices until the U.S. herd has a chance to rebuild, which will take time, he said.

The only thing that could derail prices is a hiccup in exports or drought, Brown said.

Beef cow inventories declined during 2013 for the seventh consecutive year, which will result in a 2014 calf crop more than 10 percent less than the average of the early 2000s. And cattle imports in 2013 were at their lowest level in eight years, due to contraction of herds in Canada and Mexico, and are expected to remain flat in 2014, FAPRI reports.

U.S. cattle slaughter in 2014 is expected to drop nearly 2 million head to 31.5 million and gradually rise to 34 million head by 2023. Beef production is expected to decline 1.3 billion pounds to about 24.4 billion pounds in 2014 and rise to 27.3 billion pounds in 2023.

U.S. beef cows on Jan. 1, at 28.9 million head, were down 400,000 head year over year but are expected to slowly increase to 30.1 million by 2023. Cattle on feed on Jan. 1, at 12.5 million head, were down 900,000 year over year but are expected to slowly rise to 13.8 million head by 2023.

Fed steer prices are expected to average $126.28 during the 2015 through 2023 marketing years. Cow-calf net returns are projected to average $88.17 per cow over the same period, hitting a low point of $16.52 in 2020.